The Cairns business community is concerned an increase to the minimum wage could add pressure to Far North Queensland's struggling tourism and hospitality sectors.

Queensland Hotels Association chief executive Bernie Hogan said the Fair Work Commission's ruling to increase the minimum wage by 5.2 per cent had not come as a surprise.

But he said that did not necessarily soften the blow for small business owners.

"You've got to look after your staff," Mr Hogan said.

"You've got to have well-paid staff otherwise you don't have a business, and we understand that.

"Unfortunately those costs – all costs, whether it's energy, rent or costs of staff – are passed on to consumers eventually.

"If they don't pass them on then margins start to disappear and, particularly for small businesses, this will put them under great duress."

Cairns nightclub owner Dominic Davies said he already paid many of his staff more than the award, but an increase at the bottom line would naturally push his wages higher.

He said higher wages meant higher costs for revellers.

"In any hospitality business your labour cost runs at a percentage of your sales and your costs of goods sold runs at another percentage, and you review your prices regularly to reflect that," Mr Davies said.

'Absolutely crippling'

Cairns Chamber of Commerce chief executive Patricia O'Neil said the wage increase had come at a time when businesses already faced increased costs.

"Cost of living is affecting business owners as much as it's affecting employees, because the cost of doing business has absolutely skyrocketed," Ms O'Neil said.

She said tourism and hospitality businesses in the Far North were "quietly confident" that the affects of the pandemic were over.

"They're enjoying a little bit of a catch-up from the losses that they've experienced over the last two years — it's certainly isn't back to the gravy train that it was previously," she said.

"There might be more transactions going through the till, but the costs of the bottom line of doing business are crippling, absolutely crippling."

Mr Davies fears further price increases across the region's tourism and hospitality sectors could drive more Australians to holiday overseas, where they may get more for their money.

"Whilst wages go up, and understandably so, all the naysayers will be flying straight over our heads to Thailand, Bali, Fiji, to take advantage of the cheap wages over there, which they'd probably call slave labour in Australia," she said.

"The high cost of doing business in Australia, with labour being a major component, doesn't help us being competitive."

Mr Hogan disagreed that the minimum wage increase would have any impact on competition between Queensland and South-East Asian or Pacific holiday destinations.

"That competition has been well and truly established for many years and we've all known there are cheaper options offshore," he said.

"With that additional cost they do get an additional service and certainty of where they're travelling."

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